The Margins of Global Sourcing: Theory and Evidence from US Firms

Pol Antras, Teresa Fort and Felix Tintelnot

American Economic Review, 2017, vol. 107, issue 9, 2514-64

Abstract: We develop a quantifiable multi-country sourcing model in which firms self-select into importing based on their productivity and country-specific variables. In contrast to canonical export models where firm profits are additively separable across destination markets, global sourcing decisions naturally interact through the firm's cost function. We show that, under an empirically relevant condition, selection into importing exhibits complementarities across source markets. We exploit these complementarities to solve the firm's problem and estimate the model. Comparing counterfactual predictions to reduced-form evidence highlights the importance of interdependencies in firms' sourcing decisions across markets, which generate heterogeneous domestic sourcing responses to trade shocks.

JEL-codes: D24 F14 F23 L14 L21 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/aer.20141685
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Citations: View citations in EconPapers (344)

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Related works:
Working Paper: The Margins of Global Sourcing: Theory and Evidence from U.S. Firms (2017)
Working Paper: THE MARGINS OF GLOBAL SOURCING: THEORY AND EVIDENCE FROM U.S. FIRMS (2014)
Working Paper: The Margins of Global Sourcing: Theory and Evidence from U.S. Firms (2014)
Working Paper: The Margins of Global Sourcing: Theory and Evidence from U.S. Firms (2014)
Working Paper: The Margins of Global Sourcing: Theory and Evidence from U.S. Firms (2014)
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